SUSTAINABILITY AND AFFORDABILITY

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SUSTAINABILITY AND AFFORDABILITY

• Lynette Dreyer. (1998) THE DYNAMICS OF COMMUNITY
  NON-COMPLIANCE WITH BASIC WATER SUPPLY PROJECTS.
  WRC TT93/98.
• Del Mistro R and Gouws L, (1996) WHAT LEVEL OF
  MUNICIPAL INFRASTRUCTURE IS ACTUALLY
  AFFORDABLE? IMESA Technical meeting. Kempton Park

• Sustainability
• Background
• Economic and Financial
• Technological
• Administrative
• Environmental
• Social
• Some comments
• Affordability
• Basic engineering services
• Affordability Individual
• Affodability Community
• Estimating affordability
• Conclusions

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Background (1)

• .failure of a too high proportion (1/3) of
  rural community water supply schemesmanifested
  in communities withholding payment which had been
  negotiated when the project was initiated
• MVULA TRUST- objective is to improve the health
  and welfare through increased access to safe
  water and sanitation services

• PROCEDURE
• A water committee is formed
• A proposal is prepared by an NGO or consultant
• MVULA TRUST is approached for funding
• Evaluation on the basis of
• Long term sustainability
• Willingness to pay
• Ability to pay
• Costs to include future demand and upgrading
• Assisting the most needy

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Background (2)

• Implementation phase
• Funds provided in tranches
• Local labour
• Water committee trained
• Maintenance and
• Operations management
• Repairs
• Administration
• Financial management
• Community contributions to project
• 8 of capital cost
• Funds for repairs
• Get used to paying a monthly amount for water

• MVULA agent acts as facilitator and monitor
• Effective operation, maintenance and repair is
  the responsibility of the beneficiary
• Community and service agency can report problems
  to the MVULA regional agent

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Financial and economic sustainability (1)

• ABILITY TO PAY
• Social surveys
• (Electricity pre-paid)
• Job creation spin-off?
• WILLINGNESS TO PAY
• Culture of payment
• Quality of service
• At least as promised/understood
• Much better than existing service
• Reliability no service - no pay

• Negotiated contributions to be paid before first
  water is supplied
• Why pay when the adjacent area is already getting
  water without paying
• It is difficult to pay for water in arrears
• Fear of large bills in arrears
• Pre-paid meters are better
• ON-GOING PAYMENT
• After the first water has arrived
• Funds for unforeseen costs/breakdowns

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Financial and economic sustainability(2)

• FINANCE FOR OPERATIONS AND MAINTENANCE
• MINIMISING COSTS
• Least initial costs (Local labour)
• Competitive environment for components?
• Regular maintenance
• Building capacity within the community for
  operation and maintenance

• VOLUNTARY PAYMENTS
• Enforcement
• Payment in advance during implementation
• Catering for the indigent

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Technological sustainability

• LOCAL EXPERTISE TO IMPLEMENT SYSTEM
• Scale at limit of local expertise
• LOCAL EXPERTISE TO KEEP SYSTEM OPERATIONAL
• Capacity building of local people (water
  committee)
• On-going capacity building - trained people move
  out of the system
• Simplicity of technology

• CONSULTANTS
• Inadequate time to build relationships with the
  community
• Inadequate training of the local people
• Not enough guidance to make optimum decisions
• Inaccurate guidance

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Administrative sustainability (4)

• Administrative system
• Ability to collect contributions
• Ability to prepare regular financial plan
• Ability to manage funds
• ENVIRONMENTAL

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Social sustainability

• Leadership
• Strong
• Skillful
• Lack of leadership
• Promises by political individuals
• Communication
• Water committee to community
• Apathy of community?
• Risk aversion of the poor
• Different perceived improvements in level of
  service
• Those closer to existing water versus those
  further from existing water
• Equity in service delivery

• Community cohesion
• Strong
• Could coerce payment
• Project failure rather than community conflict
• Weak
• Cannot question authority figure
• Role of watchdog organisation (SANCO, ANCYL)
• Breaks cohesion
• Normal democratic process
• Trust in water committee
• Prefer paying office than individual
• Breaks down fast when problems occur

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Some comments

• WHAT IS THE PRIORITY OF IMPROVED WATER SUPPLY ?
• When basic needs are already being met
• Basic needs as defined by the community/individual
  s and not institutions/politicians
• The new service is not seen as a significant
  improvement on the existing service

• There are differences within the community itself
  about what is considered a necessary service and
  its worth to it/them e.g.
• Those near and those far from existing water
• Attitude of men who pay for water and the woman
  who are responsible to get it to the homes
• If it was priority, wouldnt
• Communities overcome hurdles to ensure that
  systems remain operational?
• Pay for the service (e.g. pre-paid electricity is
  affordable)?

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Affordability (1)

• SOME ISSUES
• Equity in demarcation
• Municipal financial problems
• Demand for full services
• Ability to pay?
• User pays but who benefits?
• Cross-subsidisation by the rich?
• R50 - R 80 billion to meet backlog
• Public private partnerships
• Public participation

• Repeated call for realism in what can we really
  afford as an individual and as the wider community

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Affordability (2)

• Components

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Basic engineering services (1)

• To contribute to a certain level of health
• Water and sanitation
• Primary health care and education
• Electricity and solid waste disposal

• that level that is considered adequate to ensure
  health and safety of the household
• fulfills cost-effective economic benefits in
  terms of improved health of the workers..
• at a lower level ..unacceptable health risks.
• higher levels represent increased convenience (to
  the individual and the authority)

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Basic engineering services (2)

• Health and safety of the individual
• Cost effective economic benefit of the
  individual, the employer, the shareholder the
  country, TO WHO??
• At lower levels - unacceptable health risk TO
  WHO??
• At higher levels - individual convenience

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Affordability The individual (1)

• The RDP package
• 20-30 litres within 200 m
• Sanitation essentially a VIP
• Electricity
• All weather vehicle access to within 500 m

• Cost
• A function of topography, geology, bulk services
  , etc
• R4500 plus R45/month to
• R16000 plus R200/month
• What can be afforded?

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Affordability The individual (2)

• R800 is the top of the group What is the
  average?
• E.g. Survey of indigent persons earning less
  that R800
• 16 without services
• Average monthly income of R167
• How much can they afford?
• Willingness to pay?
• Culture of non-payment
• Value for money not cost of service
• Stated and revealed

• Conclusion
• Real financial difficulty for some wrt ability to
  pay
• Many reasons for continued non-payment!!!

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Affordability The community (1)

• Cross-subsidisation
• of poor by the affluent?
• by the non-residential land uses!
• A subsidy here is actually a tax there

• Cross-subsidy as social community development
• Anecdote city fathers voting for sanitation
  project, the rich to pay a higher levy
• The leaders serving the interests of the
  community? BUT
• Rich have bigger properties
• Rich located on higher ground or further out
• The poor add numbers economies of scale
• Healthier workers, economic benefits, etc..

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Affordability The community (2)

• Cities as microbe heaven
• SA urbanising similar to 1880s in Europe?
• Cities provide micro-organisms with a greater
  range of opportunities than in rural setting.to
  move from one homo sapiens to anotherexploiting
  new ecologies to create a disease threat

• Altruistic city fathers or self interest?
• Do the rich really subsidise the poor?
• Basic engineering services
• Not cross-subsidisation BUT
• Economic health and self-interest
• NATIONAL RESPONSIBILITY
• Better than basic services -
• Cost to the individual
• Special cases?

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Estimating affordability (1)

• Income and services
• Simple factors
• Components of municipal expenditure and income
• Financial impact of upgrading a spreadsheet

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Estimating affordability (2)

• Towards a model
• DBSA - Combined Services Model
• The Spreadsheet Model Input
• No of households in authority and annual growth
• By income category -
• Affordable payment/month
• Households
• Willing to pay
• Level of service categories
• of the growth in households

• Interest rate, life, upgrading speed
• Per LOS -
• capital cost,
• operating costs,
• value of infrastructure when upgrading
• Non-engineering income and expenditure and
  annual increase

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Estimating affordability (3) LOS
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Estimating affordability (4)

• The Spreadsheet Model Output
• 10-year analysis
• Annual and cumulative
• Annual operating expenditure (engineering and
  other)
• Annual income
• Capital expenditure annualised
• Total expenditure
• Model can take improvement in general prosperity
  into account by allowing a relative growth in
  rates

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Estimating affordability (5)

• An example of the effect of the speed of
  upgrading
• How much funding is available from
• Non-residential land uses
• Grants from higher authorities
• Other
• Negotiate appropriate upgrading speed
• Upgrading not affordable in some cities
• Excessive backlog
• Insufficient non-residential land use

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Conclusions

• Basic engineering services for health
• Individual health
• The health of the wider community
• The economy
• Affordability
• Not only an individual responsibility
• Community responsibility not a cross subsidy
• Must be sustained regardless of individual
  payment

• Better services are for convenience
• To individual account
• Municipal strategic plan?
• Speed of upgrading
• Financial implications
• Reduced spending on other aspects
• Need for financial assessment
• A model
• Re-negotiate upgrading programme